Problem with acqusion (stock-for-stock) accounting

OTTBMom

In October 2022, Duke Realty merged with Prologis. I owned DR in my IRA, and there was a stock swap on 10/3 to account for the acquisition. Everything looks fine in my main register on Quicken, but under the covers I see a Realized Gain of about $4000 for the transaction. I have been trying to figure out why I have a $4000 difference between Quicken and Fidelity, and now I've found it but I can't fix it. Is this a bug? I can provide detailed in report form if needed. Essentially, Quicken shows that I 'sold' the DR at a loss, then purchased Prologis at $0.00. But, as I said, this only shows up if I run a report to show realized gains or detailed transactions for the year. I do not see it in the register.

Frankx

Hi @OTTBMom

From your description, it sounds like you have incorrectly reported the stock swap transaction in Quicken.

You should have used the "Corporate Acquisition (stock for stock)" type of transaction in Quicken - did you use that or some other transaction type (if so - which type)?  The correct entry would have recorded no gain or loss on the transaction with a combination of a "Removed" transaction and an "Added" transaction.  It would look like this (note the amounts are made up).



If you made some other entries (that don't look like the above example) you may want to delete them and re-do that transaction.

Let me know if you have any followups.

Frankx

q_lurker

You cannot trust the FI to pass on all the info Quicken has and needs. Typically they do not send the cost basis of the new holding. Nor do they send multiple lots, when applicable. The conventional wisdom is to use Quicken’s Corporate Acquisition macro (Enter Transactions button) which covers those circumstances. In doing so, one would then delete or not accept the FIs version. 

The surrender of the Duke Realty shares should be a Remove Shares transaction for all the shares owned at the time. That may produce a Cap Gains line item in some views and reports, but the value should be $0. 

The acquisition of the Prologis shares should be Add Shares transactions that identifies when the comparable Duke shares were acquired and what their basis was - on a per lot basis. 

OTTBMom

Oops -- sorry, meant Realized Gain of MINUS $4k. it's actually showing a loss, which is why my register is off by about that amount.

q_lurker

Edit the initial Add Shares of Prologis. Make sure the correct basis is included in the transaction. 

Frankx

Hi @OTTBMom

From your description, it sounds like you have incorrectly reported the stock swap transaction in Quicken.

You should have used the "Corporate Acquisition (stock for stock)" type of transaction in Quicken - did you use that or some other transaction type (if so - which type)?  The correct entry would have recorded no gain or loss on the transaction with a combination of a "Removed" transaction and an "Added" transaction.  It would look like this (note the amounts are made up).



If you made some other entries (that don't look like the above example) you may want to delete them and re-do that transaction.

Let me know if you have any followups.

Frankx

OTTBMom

I did not enter the transaction. I download my transactions from Fidelity, where this shows up correctly. It is only wrong in Quicken. I really don't see why it's wrong in Q, but I did not make any manual adjustment at all. I only found this error because I ran a report to show my gains, losses, and income for YTD, and this -3895.28 showed up on the report as a "loss" from the sale of Duke Realty.

OTTBMom

Follow up -- I re-read my post, and sorry if it sounds snarky. Do not mean that at all. Thanks for helping. I just meant that I didn't do the txn manually, so don't really think I should have to fix it manually -- plus, won't it just get re-messed-up when I download from Fidelity again? Still, I'll try what you suggested and report back.

q_lurker

You cannot trust the FI to pass on all the info Quicken has and needs. Typically they do not send the cost basis of the new holding. Nor do they send multiple lots, when applicable. The conventional wisdom is to use Quicken’s Corporate Acquisition macro (Enter Transactions button) which covers those circumstances. In doing so, one would then delete or not accept the FIs version. 

The surrender of the Duke Realty shares should be a Remove Shares transaction for all the shares owned at the time. That may produce a Cap Gains line item in some views and reports, but the value should be $0. 

The acquisition of the Prologis shares should be Add Shares transactions that identifies when the comparable Duke shares were acquired and what their basis was - on a per lot basis. 

OTTBMom

Well, that was pretty much genius! Thanks. I went in and modified the two transactions, so instead of "Sell" and "Buy" they were marked as "Removed" and "Added" and voila! My cap gains/losses report is now correct. I see now why you are a "Superuser" :-)